Tata Motors shares rise over 2% in early trade as Moody's upgrades company's rating

Shares of Tata Motors surged as much as 2.17% to ₹1047.50 apiece on the BSE on Thursday, August 8.

The stock rallied after Moody's Ratings on Wednesday said it has upgraded Tata Motors' corporate family rating by two notches to Ba1 from Ba3, citing sound governance practices, particularly the company's creditor-friendly financial policies, track record, and management prudence.

The ratings agency also said it has upgraded Tata Motors' (TML) senior unsecured instruments' ratings to Ba1 from Ba3.

Moody's said in a statement that it has also maintained a positive outlook on all ratings.

"TML's two-notch rating upgrade with a positive outlook follows the company's sustained track record in achieving revenue growth, improving profitability, and reducing debt using its large free cash flow despite its elevated capital expenditure to refresh its products," Moody's Ratings Senior Vice President Kaustubh Chaubal said.

Explaining the rationale behind the ratings, Moody's said strong underlying demand in key geographies and business segments and a refreshed product slate that caters across different price points have paved the way for the continued improvement in TML's operating profile.

"These factors, alongside its cost rationalisation efforts, have assisted in its margin recovery," it added.

Yesterday, the company launched its maiden mid-sized electric SUV, Curvv.ev, at a starting price of ₹17.49 lakh.

The auto giant said it remains confident about the long-term prospects of the electric vehicle segment and termed the fall in sales numbers a "short-term" issue.

The company added that it was aspiring to achieve one lakh unit sales in EVs in the current fiscal year.

EVs account for 12% of the company's overall sales.